Built For
Instruments: Options
Trading Style: Swing Trading
Strategy Overview
This strategy is built around the idea that the biggest opportunities in trading come from key support and resistance levels on higher timeframes, especially when they align with major news or data catalysts. By focusing on daily and weekly chart levels and waiting for the right event-driven confirmation, traders can identify high-probability setups with the potential for outsized returns, without overtrading or relying on low-timeframe noise.
This playbook is especially suited to options traders looking to grow smaller accounts by patiently waiting for high-conviction moments, then executing with discipline and risk control.
Build the Right Foundation First
Before getting to technical setups, this strategy emphasizes the mindset of a successful trader:
- Emotional stability – stay neutral through wins and losses.
- Risk/reward awareness – understand not every day is a trade day.
- Focus on learning – prioritize skills and knowledge over fast profits.
New traders often do the opposite, chasing money and falling into FOMO and anxiety. Without the right mindset, even the best strategy will fail.
Strategy Rules
Options Style
Weekly or monthly contracts
Identifying Key Levels
- Use weekly and daily charts to find key levels.
- Identify major support/resistance levels from past market highs, lows, and reactions on daily/weekly charts.
- Round psychological numbers like 5000, 6000, or 7000 on SPX tend to act as strong magnets.
Context + Catalyst Alignment
The strategy thrives on the convergence of:
- Price reaching a key level.
- Catalyst providing the volatility needed to trigger a large move.
- Catalyst examples:
- FOMC Meetings
- CPI/NFP Releases
- Earnings Reports (esp. Nvidia, Apple, etc.)
- Geopolitical Events (e.g., tariffs, elections)
Only take trades when the technical level and fundamental catalyst align. Avoid trading key levels without a strong catalyst — low probability setups tend to fail or chop.
Confirmation Before Entry
Don’t enter blindly. Wait for confirmation:
- A strong bounce or rejection from the level.
- Multi-day hold or reclaim of the level.
- Clear shift in sentiment post-catalyst.
Patience is critical — even if the level is perfect, wait for the market to validate your idea.
Sizing for Zero
- Use Brando’s “Size for Zero” method — risk what you’re comfortable losing completely, rather than using a tight stop.
Example:
- Instead of risking $5,000 with a 20% stop, size your total trade to $1,000—fully acceptable loss if the trade goes to zero.
- This allows you to hold through volatility and target massive R multiples (5x, 10x+).
This mindset builds emotional control and avoids premature exits.
Pros and Cons of the Strategy
This model is designed to deliver high-quality, repeatable setups, but like any trading method, there are key things to understand before using it.
Note: The cons listed here aren’t disadvantages. They are things to be aware of — important characteristics that require patience, discipline, and proper management to make the model work effectively.
Pros
- High Probability: 80% win rate when technicals and news align.
- Scalable: Can grow accounts fast during high-conviction setups.
- Discipline-Driven: Encourages patience, planning, and proper risk.
Cons (Things to Be Aware Of and Manage)
- Requires Patience: Occasionally, there are only a few ideal setups per year.
- Execution Pressure: Need to be mentally and technically ready when the level and catalyst align.
Trade Breakdown
Example 1: SPX Long from 5000 (May 2024)
- Setup: After a multi-week consolidation, the S&P 500 pulled back to the psychological 5000 zone, a major support area on the weekly chart.
- Technical Context: Price formed two higher weekly lows following the initial test of 5000, signaling strength and establishing a potential reversal base.
- Catalyst: Nvidia delivered a massive earnings beat, jumping over 25%, while inflation data showed signs of cooling and the labor market appeared to be stabilizing. Together, these developments supported bullish sentiment across the tech sector and the broader market.
- Entry: Calls were initiated in the 5150–5160 range after confirmation through price structure and improving macro signals.
- Outcome: SPX rallied over 200 points in two weeks, and the position returned over seven figures in gains. This was a high-conviction trade based on level, news, and confirmation.
Example 2: SPX Breakout Post-Election (November 2024)
- Setup: In the months leading into the election, SPX was range-bound, consolidating below the 5700 level.
- Catalyst: After Trump’s re-election, the market gapped up on optimism around pro-growth policies and deregulation. This served as the macro driver for trend continuation.
- Technical Context: The 5700 resistance zone had acted as a ceiling for weeks. The post-election gap and hold above this level confirmed a breakout.
- Entry: Long calls were taken once the price reclaimed and stabilized above 5700.
- Result: SPX rallied over 400 points within a month, peaking near 6147. A clean example of technical breakout aligned with a major political catalyst.
How to Backtest This Support and Resistance Strategy
You can test this Support and Resistance strategy before risking real money using TradeZella's backtesting. Load 11+ years of historical data, mark your major support and resistance levels on the daily and weekly charts the way you trade live, and replay price as it approaches those levels. Wait for price to reach a key level alongside a catalyst, then look for confirmation through a strong bounce or rejection, a multi-day hold or reclaim, and a clear shift in sentiment before taking the trade. Place your entry with a defined risk, drag your target directly on the chart, and let the setup play out toward higher reward-to-risk targets. Every backtested trade gets logged automatically with your entry, exit, position size, and P&L. Add notes on the level and catalyst, tag mistakes, and review the setup the same way you would a live trade. After 30 to 50 trades, you can see your win rate, profit factor, and expectancy on this specific setup, giving you a real picture of how it is likely to perform in live market conditions before you risk a dollar.
When you start trading live, import your live trades into TradeZella, the AI trading journal that does the journaling for you. Your backtest results and live results live in the same platform, so you always know how the strategy performs in testing vs how it performs with real money, without switching between tools or maintaining separate spreadsheets.
TradeZella is also introducing automated no-code backtesting, where you define your rules and run the backtest, and then it shows you how the strategy would have performed over years of historical data without you needing to step through a single chart.
Start Backtesting This Strategy Using TradeZella
Frequently Asked Questions
What is the Support and Resistance strategy?
The Support and Resistance strategy is a swing trading model for options traders that combines major higher-timeframe levels with news catalysts. The idea is that the biggest opportunities come from key daily and weekly support and resistance levels, especially when they line up with a major event or data release. You wait patiently for price to reach a key level with the right catalyst, then execute with discipline rather than chasing low-timeframe noise or overtrading.
How do you identify key support and resistance levels?
Use the weekly and daily charts to find major levels from past market highs, lows, and strong reactions. Round psychological numbers, like 5000, 6000, or 7000 on SPX, tend to act as strong magnets and often become the most important levels. The goal is to mark a small number of significant levels that the market is likely to respect, rather than drawing dozens of minor lines on lower timeframes.
Why does this strategy require a news catalyst?
A key level alone is often not enough to produce a large move. The strategy thrives on the convergence of price reaching a key level and a catalyst providing the volatility needed to trigger an outsized move. Catalysts include FOMC meetings, CPI and NFP releases, major earnings reports like Nvidia or Apple, and geopolitical events such as tariffs or elections. Trading key levels without a strong catalyst tends to produce low-probability setups that fail or chop.
What is the "Size for Zero" method?
Size for Zero means risking only what you are fully comfortable losing rather than relying on a tight stop. For example, instead of risking 5,000 dollars with a 20% stop, you size the entire trade to 1,000 dollars, a loss you can fully accept if it goes to zero. This lets you hold through volatility without getting shaken out early and aim for large reward multiples like 5 times or 10 times your risk, while keeping your emotions under control.
What instruments and timeframe does this strategy use?
This is an options swing trading strategy that uses weekly or monthly contracts, with key levels identified on the daily and weekly charts. It is designed for traders who want big, catalyst-driven moves and are willing to wait for high-conviction setups, sometimes only a handful of ideal opportunities per year. It is especially suited to options traders looking to grow smaller accounts patiently rather than trading every day.
Can I backtest the Support and Resistance strategy?
Yes. You can test this strategy using TradeZella's backtesting with 11+ years of historical data. Mark your major support and resistance levels on the daily and weekly charts, replay price as it approaches those levels, and only take the setup when a catalyst and confirmation align. Every trade logs automatically with entry, exit, position size, and P&L. Add notes on the level and catalyst, tag mistakes, and review the setup the same way you would a live trade. After 30 to 50 trades you can see your win rate, profit factor, and expectancy on this specific setup before risking real money.
What is TradeZella backtesting?
TradeZella backtesting lets you replay 11+ years of historical market data across forex, futures, stocks, and crypto and place trades as if you were trading live. Set up your timeframes the way you trade, use automatic position sizing, drag your stop and target directly on the chart, and every trade gets logged automatically with your entry, exit, position size, and P&L. TradeZella is also introducing automated no-code backtesting, where you define your strategy rules in plain English and the engine runs them across years of historical data, showing every individual trade executed with the results without you needing to do anything.
